US firm files class-action lawsuit against Infosys

US firm files class-action lawsuit against Infosys
BENGALURU: Yet another US law firm, Schall Law Firm, has filed a class-action lawsuit against Infosys on behalf of shareholders of the company.

Schall is at least the fourth firm that is attempting a class-action suit in response to the stock market crash in October following the whistleblower complaints alleging “unethical practices” by the company’s management to inappropriately boost short-term revenue and profit.

Infosys on Wednesday condemned the "mischievous insinuations" made by anonymous sources against its co-founders & ex-colleagues. Infosys chairman Nandan Nilekani stated that, “These speculations are appalling & seem to be aimed at tarnishing the image of some of the most accomplished individuals. I have deep regard for the life-long contribution of all our co-founders."

The Schall lawsuit has alleged violations of the Securities Exchange Act. The complaint has alleged that the company made false and misleading statements to the market. “Infosys used improper recognition of revenue to boost short-term profits. CEO Salil Parekh skipped standard reviews of large deals to avoid accounting scrutiny. In fact, the company’s finance team was pressured to hide details of these deals and other accounting matters from auditors and the company’s board of directors,” the complainant said in the lawsuit.

“Based on these facts, the company’s public statements were false and materially misleading throughout the class period. When the market learned the truth about Infosys, investors suffered damages,” it said.

Other firms that have filed similar suits include Rosen Law Firm, Bragar Eagel & Squire, and Howard G Smith. Law firm Bernstein Liebhard was also said to be investigating potential securities fraud claims on behalf of shareholders of Infosys.

Infosys faces another whistleblower complaint, CEO accused of misdeeds

Weeks after IT major Infosys faced a whistleblower complaint alleging unethical practices by its top officials, another such letter has surfaced accusing the company's chief executive officer Salil Parekh of indulging in misdeeds and urging its board to initiate action against him.

Schall said it encourages investors with losses in excess of $50,000 to contact the firm. Investors who purchased the company’s shares between July 7, 2018, and October 20, 2019, are encouraged to contact the firm before December 23.

None of the suits, it appears, have been admitted yet by any court. For them to be certified as a class action, an investor who has been harmed has to come forward as a lead plaintiff. Whether that has happened or will happen is not clear. Infosys has not been commenting on these suits.